Hormel narrows profit forecast amid weak demand
Supply chain woes and high prices hit sales volumes
30 May 2025
2 minute read
By: Hormel Foods tightened its annual profit forecast towards the lower end on Thursday, as the Skippy peanut butter maker struggles with supply chain issues and weak demand that may counter the benefits of its price hikes, reported Reuters.
Like peer Tyson Foods, Hormel took consecutive price hikes in the past to protect its margins from persistently high commodity prices, as well as supply chain disruptions caused by bird flu.
However, the higher prices come at a time when consumers are reining in budgets as they brace for a possible economic recession triggered by US President Donald Trump's tariff policies.
Earlier this month, Tyson Foods saw weaker demand for its products including beef, despite beating profit estimates during its latest earnings.
Meanwhile, Hormel has also been facing constraints at its retail and food-service segments due to reduced shipments of raw materials such as beef and nuts, and lower production by third-party manufacturers.
The factors led to a 7% decline in second-quarter sales volumes in both retail and food service segments.
Hormel, which sells snacking and packaged meat products, posted quarterly sales of $2.90 billion, compared with analysts' estimates of $2.91 billion, as per data compiled by LSEG.
The company expects annual organic net sales to grow in the range of 2% to 3%, compared with prior forecast of 1% to 3% growth.
But it narrowed its annual adjusted profit to a range of $1.58 to $1.68 per share, with the midpoint lower than that of its previous forecast of $1.58 to $1.72 per share.
On an adjusted basis, it earned quarterly profit of 35 cents per share, compared with analysts' estimates of 34 cents per share.
